How much is my house worth? Depends on the day.
We all know that Seattle’s real estate market is hot hot hot. We’ve seen jaw-dropping appreciation, bidding wars, and a continued sense of way too many people wanting/needing to buy houses and a paltry few for sale. Enter automated valuation models like Zillow’s Zestimate and Redfin’s automated price estimate, and one would think that the value of their home increases or decreases hourly by tens of thousands.
When so few listings are available for homebuyers to purchase, the market creates a new sense of itself every week. Imagine this – you are selling your $500,000 home and the week you list it there are no homes for sale in your neighborhood. 10 buyers make offers on it and they compete. These buyers are exhausted, need a place to live, and are willing to write a very competitive offer with escalation clauses, waived inspection and financing contingencies. The house now sells for $575,000. Now, your neighbor lists their similar house the next month and they price it at $575,000 based on your comparable sale. They get one offer for $575,000. The next month, three of your neighbors decide to sell and list the same week. Everyone lists at $575,000 and because there is a relative increase in supply, they are lucky to get their asking price and so it goes.
This creates a scenario where in a 90 day period, the value of a house technically can fluctuate by $75,000 without any rhyme or reason. Enter the algorithms, and the computer modeling spits out valuation estimates based on those comparable sales using the county records as their technical data point for what these houses are. The robots have never been inside and smelled the 20 years of cat urine, or gazed out to find a stunning view of the Olympic Mountains, or perhaps the scenic view of the ass-end of a dumpster. Point is, data is data. Houses and people are houses and people. No two are alike.
As a 13 year real estate veteran, analytics enthusiast, and believer in a higher bar of professionalism and expertise in the real estate industry, I have to say that pricing/evaluating property value is more challenging now than ever. Can you overprice a home in this market? Absolutely. Are computer valuations accurate? No, but they are not without their value and place in pricing perception. Imagine a world where AVM’s (Automated Valuation Models) create the value of a home in the eyes of sellers and buyers. The tail wags the dog, and we have computer algorithms creating the cost of real estate. Remember when in 2008 the mortgage industry created millions of qualified homebuyers when in reality, they shouldn’t have existed?
Truly, the only time it really matters how much your house is worth is when you’re selling or refinancing it. With pricing such a moving target, the experience behind the analysis is so much more important than ever before.
Are you curious what your home is worth? Have you ever been treated to a Comparative Market Analysis? I’d love to meet with you! You can email me at firstname.lastname@example.org, or give me a ring at 206-353-7625. If you want to get fancy, click here to fill out some information about your home first. I look forward to it.